Home Counties Dairies Ltd v Skilton [1970] 1 WLR 526
Restrictive covenant enforced protection to which employer entitled and thus enforceable
Facts
In an employment contract between a dairy company and dairyman, it was agreed that the employee, within one year of termination of his employment contract, would not “serve or sell milk or dairy produce to … any person who at any time during the last six months of his employment shall have been a customer of the employer and served by the employee in the course of his employment.” The employee left the service of his employer and entered the employment of another dairy company.
Issues
In an action to enforce this clause by injunction the judge held that the reference to “dairy produce” prevented the respondent from entering the employment of a grocer who sold dairy products. Therefore, the clause went beyond the protection of the goodwill of the employer’s business and was void. The plaintiff appealed to the Court of Appeal.
Decision/Outcome
The appeal was allowed. The contract must be read in context. Its intention was clearly to protect against an employee who engaged with a rival dairy business and it clearly did not intend to prevent an employee from joining a grocery business generally. The agreement merely enforced the protection to which the employer was entitled and, accordingly, was enforceable. Furthermore, the restriction on the employee serving customers whom he had served during the last six months of his employment with the former employer was intended only to protect the employer’s trade connection and, in the circumstances, was no longer than was necessary for the protection of the employer.
Updated 19 March 2026
This case summary accurately reflects the decision in Home Counties Dairies Ltd v Skilton [1970] 1 WLR 526. The legal principles described remain good law. The case continues to be cited as an established authority on the enforceability of restrictive covenants in employment contracts, particularly regarding the protection of customer connections and the use of contextual interpretation to save a covenant that might appear over-broad on its face. There have been no statutory or case law developments that undermine or overturn this decision. Readers should note, however, that the law on post-termination restrictive covenants in employment has continued to develop through subsequent case law, and the enforceability of any particular covenant remains highly fact-sensitive. The general framework — that a covenant must go no further than reasonably necessary to protect a legitimate business interest — continues to apply. The article is suitable for its intended purpose as an introductory case summary.
